Tariffs on steel and aluminum would increase the cost of farm machinery and structures like steel grain bins.

Amy Mayer
/ Harvest Public Media file photo

Originally published on March 13, 2018 10:46 am

When President Donald Trump follows through on his plan to tax imported steel and aluminum, American farmers will get less money for some crops and pay more for machinery.

Farm groups say their members worry the countries targeted by the tariffs (the list of which has not been finalized by the Trump administration) will tax farm products. The European Union already has threatened imports of corn, rice, cranberries, peanut butter, kidney beans, orange juice and even bourbon, which is usually made from corn.

There is a slight silver lining for consumers, however, because prices of those products may drop in the U.S.

The EU and China are large enough customers that a disruption in trade would impact global prices. If they are buying less, “that means that we have more left in the United States and, all things equal, prices will go down,” University of Nebraska-Lincoln agricultural economist Wes Peterson said.

But, he added, tariffs are trade-offs: If consumers get a better deal on food, it’ll be at the expense of farmers, “who would be selling less, and also then would be getting lower prices.”

Farm income is already expected to drop in 2018, to the lowest level since 2006, due to depressed prices for crops like corn and wheat.

And just like cars, appliances and foods packaged in steel and aluminum cans, farmers could end up paying more for farm machinery and equipment, from tractors to grain storage bins to metal machine sheds.

Trump is hoping tariffs on foreign-made steel will make the domestic market more competitive, but already, prices are going up at American mills.

“What we’re seeing is steel prices are very quickly increasing to highs we haven’t seen since 2011 or 2008,” according to Phil Raimondo, president and CEO of Behlen Manufacturing, which uses steel to make buildings, livestock water tanks and grain elevators.

Raimondo added that the Nebraska-based company is already warning customers that prices for its products will go up 5 to 10 percent to cover the cost of the expected tariffs.

According to an Agri-Pulse story, Agriculture Secretary Sonny Perdue says taxing steel and aluminum imports could give the United States an edge in trade negotiations, including the ongoing talks to revise NAFTA.

Groups that represent farmers are not on board.

“President Trump’s plans to place U.S. tariffs on imported steel and aluminum presents a real and viable threat to the future of U.S. agricultural trade and the prosperity of American agriculture,” Nebraska Farm Bureau president Steve Nelson said in a statement.

A trade war will be harder to win and cause more conflict than Trump may be anticipating, Peterson said, even if it comes with a discount on bourbon.

“Everybody loses because there are two sides to these things,” Peterson said. “Consumers pay higher prices or producers are hurt through some retaliatory policy.”

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When it opened in 1914, the Panama Canal introduced the harvest from Midwest farms to the world and helped link U.S. farmers to the global economy. Nearly a century-old, the canal today remains an important connector of global trade, from the U.S. heartland to Asia.

“Obviously it’s one of our major achievements,” said Bill Angrick, a former state Ombudsman of Iowa who was born in the Canal Zone and has studied the engineering marvel. “It’s like going to the moon. It’s something we did well and did right.”

The Dallas Morning News has written an appeal to President Trump, urging him not to cut off Texas’s economic contact with its neighbor to the south.

The editorial noted that Mexico is one of the key reasons the Lone Star State’s economy has been strong in recent years. And, the editors stated, threatening a trade war over the building of a border wall will hurt Texas more than any other state.

As The Denver Post reports, if the Trump Administration imposes a 20 percent levy on Mexican imports to help pay for a border wall, a move that could cause Mexico to retaliate, it would put Colorado’s ranchers, manufacturers and natural gas producers at risk.